July 12, 2011

The issue of raising the debt ceiling has become the top political topic this summer. The ceiling is the maximum legal limit for how much debt the US government can hold, and right now it stands at about $14 trillion. In the past, as I understand, raising the limit has never been controversial, but this year, because of the power of the Tea Party Republicans, it’s now being contested by the “small government” Republicans.

The mainstream political class (both left & right) has been going full court press on fighting this for the past week and a half, with a parade of “independent” economists being presented in the media declaring that it would be an unheard of catastrophe to not raise the ceiling and force a government default.

This is meant to scare the public into forcing the legislators to raise the debt ceiling, and it could work. I do believe what he’s saying, and it’s clear why he’s saying it, too.

My question is, what kind of confidence is this supposed to give us about our government? Paying for current expenditures by borrowing? Has anyone ever heard of that being a sound method of operating? And anyway, isn’t Social Security supposed to pay for itself?

Of course we already knew all these things. I just marvel that the great majority of this country, especially the members of the media, can take his comment so innocently, either failing or refusing to grasp what his comment really means. Not only that, but even after this comment revealing just how broken and hollow the system here is, as soon as the debt ceiling is raised and debt goes on sale again, there will be buyers clamoring for Treasury debt even more, hungry for that “sure bet” with American debt in the financial markets. But how are those debts going to be paid back? With more borrowing. Which will be paid for with more future borrowing. And so on.

The debt ceiling will be raised before the August 2 deadline, I have no doubt. We will find a way to keep borrowing, and catastrophe will be averted, for the time being. But what’s clear is that the government is, in reality, bankrupt, and they cannot hide this truth forever. At some point, the borrowing will become too expensive. The debts too great for the tattered world economy to bear. Then the real catastrophe comes. For now, though, let the bread and circuses continue.

July 2, 2010

Yes, America has long-run budget problems, but what we do on stimulus over the next couple of years has almost no bearing on our ability to deal with these long-run problems.

Following Krugman’s logic, the best way to stop smoking would be to just keep smoking now, because quitting now would have bad consequences, and figure out in a few years how you are going to quit smoking.

In an interview with Rachel Maddow on MSNBC, Mr. Paul appeared uncertain about whether he would have supported forcing private businesses to desegregate in the 1960s, suggesting that might run afoul of his libertarian philosophy. His views emerged as Ms. Maddow asked Mr. Paul if he thought a private business had the right to refuse service to a patron who was black.

“I’m not in favor of any discrimination of any form,” he said. “ I would never belong to any club that excluded anybody for race. We still do have private clubs in America that can discriminate based on race.”

The New York Times is doing its college best to pillory him for his supposed beliefs about racism, and it pretty well succeeded by touching off a firestorm around this issue. (It’s hard to tell what he actually believes, or even what his stated views are. Though I have read people say that he does give “yes” answer to the private business question, I have watched the whole thing and I did not see where he does so. Instead he equivocates and dodges every direct question Maddow asks, never states whether he’s for or against the Civil Rights Act, and often just goes into bits of historical anecdote.) Rand for his part is doing his best to turn himself more mainstream, to compromise his views for the sake of electability, something his dad has never done, so that he ends up not seeming to have any values or firm beliefs at all except getting himself elected Senator. This seems to show that while beliefs are transmitted easily from parent to child, moral courage is not. This does not jeopardize my support of Rand Paul though because I am past the stage of seeing coercive democracy as a legitimate form of government. Even if I agreed with 100% of what a candidate in my voting district said, I would not vote for them. I no longer believe in the legitimacy of election to the offices of our government today, so it makes no difference to me whether Rand Paul loses because of this, or whether he completely disavows his presumably pro-freedom views, or whether he wins as a Dixiecrat in Kentucky.

However, the substance of the racism issue needs addressing. It is important to say, the views here presented are mine — I eschew presuming to speak for other people by labelling this to be the “libertarian” response. It is my own, with which people who call themselves libertarians might agree.

So I will take up Rachel Maddow’s question that Rand Paul would not. Do private businesses, such as restaurants, have a right to refuse service to people because of their skin color? Yes, they do. Is this discrimination? Of course. Is this unfair to minorities? Yes, if they want to eat in that restaurant. Or go to that college. Or ride that bus. (I am only contemplating private companies and institutions here.)

What are the problems with this? Well, racism is ugly. It is backwards, it oppresses the minorities who are being discriminated against, and it hurts both parties involved, the discrimanator and the discriminated.

The government intervention solution to this problem is to force racist business owners not to discriminate along racist lines among their clientele. By doing so, the “rights” of the person who was discriminated against are restored, and the hope is that in the long run, racism will be stamped out.

However, to say that the government has the right to force business owners to integrate is to say government has the right to correct our consciences or actions wherever it disagrees with them. Assuming control of a man’s business and forcing him to run it a certain way is slavery. It is not total slavery like the slavery of the blacks before the Civil War, but it is the same principle. The denial of one man’s property rights by another, be it the property of his body, his money, or other goods he has acquired, constitutes slavery. It is nothing but the doctrine that the “people in charge” have the right to tell others what to do, the same doctrine which supported slavery of the blacks before the Civil War.

It is also important to realize that this coercive solution can work both ways: as the government in a society which supports forced integration may force racists to cease discriminating, by the same token we may expect the government in a racist society to force non-racists to discriminate, which I imagine almost everyone would be against.

Still, the question remains, should we who are against racism not attempt to fight it by supporting government intervention against discrimination and opposing laws that are outright racist and discriminatory themselves? Indeed that is at least a consistent position, but it is in conflict with the fundamental human right of property. The right of property entails the right to dispose of one’s property however one wants. Because a private business is indeed the sole property of its owner, the owner may operate their business in whatever way they desire. This includes discrimination: there is no obligation to serve everyone who wants to be served, to hire everyone who wants to be hired. Imagine a law that forbade discriminating based on a customer’s ability to pay. Then business owners would be forced to serve everyone for free, which clearly would be recognized as slavery. A man needs offer no explanation in why he disposes of his property as he does; if he does not want to commercially transact with another party, he does not have to, whatever the reason may be. The negation of this idea is the real human rights violation.

I also question the efficacy of interventionist laws to effect the kind of change intended. The advocates of corrective measures like the Civil Rights Act of 1964 believe that such laws will have the effect of ending racism by forcing racists to interact with other races and thereby realize their beliefs were wrong. This is nothing but a dream.

The method of exterminating racism by forced integration is guaranteed to be fraught with conflict, no two ways about it. Nothing less could be expected by forcing people into space with others they deeply dislike. Racist elements will resist the imposition of outside mores, and, to judge from the American experience in the 1960’s, react violently. Lastly, to the extent that the policies do end up changing the way some people think, believing that everyone’s mind will change in a positive way is unrealistic. It is impossible to tell how any individual would react in a forced integration situation, but it is just as reasonable to assume that a borderline racist’s views may be polarized as to assume that they will become non-racist.

In the city I grew up in, another unintended consequence of a forced integration law was easy to observe in the phenomenon of “white flight.” In the 1970’s, the federal government mandated municipal school districts across the country to start programs of busing students across town to force more racial intermixing at schools. This caused many white families to move out to the suburbs to escape these policies, perhaps not because of outright racism but merely discomfort with the situation. The end result, which clearly persists today, was the abandonment of many of the old parts of town and the growth of suburbs that are much richer and almost all white. A rule intended to increase integration in schools ended up causing more economic stratification and geographical separation between the races.

Another problem that advocates of anti-racism laws overlook is that, in order for such laws to be passed, the society must already be broadly anti-racist. In other words, in a deeply racist society like the United States was in the 1800’s and early 1900’s, there is no hope of anti-racist laws ever being passed. The real danger is that positively racist laws instead will be passed that legalize and institutionalize discrimination, mandating separate facilities for different races, banning education for minorities, permitting slavery, and so on. To be sure, these laws are pure evil, and American states all had plenty of laws like these. (It should be noted, however, that if these laws are supported by a will of the majority of the population including the minorities, then they are fundamentally just in a democratic way.)

If racial discrimination is a problem in a democratic society, then anti-racist laws like the Civil Rights Act only have a chance of being passed when the problem is already receding. To the extent to which they act to repeal actual racist laws, they are mostly superfluous, and in the extent to which they impose rules against discrimination on private citizens, they are tyrannical.

What is the way, then, to combat racism? I believe what it takes is for people who disagree with hateful and ignorant doctrines such as racism (as well as religious superiority, homophobia, sexism, etc.) to stand up to intolerant people and disagree with them on their level. It takes not only friends, but the victims of the discrimination themselves to stand up.

The lunch counter sit-ins of the 1960’s were so admirable and effective because they fundamentally challenged the culture of segregation in a peaceful form of protest. As long as everyone observed the segregationist rules, the true ugliness of racial discrimination was hidden. The protesters endured tremendous humiliation and risk of personal danger to unmask it. By confronting the issue directly, entire communities of individuals were forced to decide whether they could really support such obvious, baseless hatred. It takes a long time, but this is the only way change can happen.

There is plenty more I could write about this, but I will now conclude this post. To summarize my views, though, I defend the right of anyone to believe what they want, which includes racism. By the same principle with which I oppose the enslavement of blacks to whites, I oppose the coopting of property to force racists to enter into associations they do not want to. I do not defend the right of anyone to harm anyone else. I believe that when left free to associate, people will naturally overcome artificial and false prejudices about each other.

May 14, 2010

Recently, I have come across three proposed axioms that govern mathematics and human life/existence in general, and such things as these provide fertile ground for thinking.

The Axiom of Choice — I first encountered this tonight after surfing through a few layers of web pages on abstract algebra. (I was reading about that to try to find some good concepts and proof ideas to show to one of the students I work with.) This axiom (as far as I can tell, it is axiomatic) is limited (as far as I can tell) to mathematical use only, although inasmuch as that application has to do with taking our rules of logic to their furthest extent, its use may pour over into other areas of inquiry.
The axiom of choice states that it is always possible to pick one object from each set of a collection of non-empty sets. It was surprising to me when I first read this that such a statement even needed to be made, yet after reading some relevant examples, I was surprised to find that this was an essential fact that I (not to mention mathematicians throughout history) had taken for granted. A vital stipulation of the axiom, as stated where I found it, is that a rule for how to pick the objects does not have to be given, or even to be exist, for it to still be possible to choose objects.
Why would a rule on how the objects are picked matter? Imagine that each of our sets is just a random group of integers, such as [2, 6, 235], [-78, 0], and [490, 23, 293875928371]. With just three sets, we can perform the choosing for ourselves in less than a second.
But what if our collection is all possible subsets of the integers, a collection which is infinite and consists of sets which are finite as well as infinite (for example, odd numbers)? To do work with these sets or objects from them, we must, or so we think, at least know what we are dealing with, and the only way to do that systematically with an infinite number of sets is to define the rule for taking an element from each. A choice function for this collection (I think) could be as follows: For a given set S in our collection, f(S)=0 if 0 is in S, the least positive number in S if 0 is not in S, or the greatest negative number in S if S contains no positive numbers nor 0.
However, there are collections and sets where we could not find a rule. An example (thought of off the top of my head) would be sets composed of any number of integers and/or objects from my desk. This could include of course numers, but also a rubber band, a book, a box of tissues, a guitar capo, a cell phone, a bunch of change, an Amazon credit card statement, and so on. Here, it is less obvious how to specify a rule to pick objects for sets without integers. (This may fail, I realize, because there is not an infinite amount of objects on my desk, but I hope it illustrates that problems can arise with more complexity and arbitrariness in the makeup of our sets)
What the axiom of choice says is that it is possible (and therefore allowable in formal proofs) to choose objects from sets, without specifying a rule for how to do so, and even in cases where no such rule may even be possible. This is extremely powerful, and the wikipedia article on the subject points out numerous equivalent results throughout mathematics, and results that rest on the axiom. In probably every math class I took at UGA, at some point the phrase “Pick an object from each set” was uttered (or something equivalent), but never did I question whether that action was doable.
Don’t expect a complete logical justification or defense of this principle from me right now, though. It will be food for thought for a while.

The Action Axiom — Ludwig von Mises specifies this axiom at the opening of Human Action. The axiom simply states that “Man acts.” From this (to my understanding of Austrian economics) all other economic knowledge is derived. Whether Mises was the first to enunciate this axiom, I do not know.
His usage of the word “act” is defined in the first sentence of the first chapter: “Human action is purposeful behavior.” Put other ways, this is “will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life.”
In the first part of Human Action, Mises goes through the ins and outs of this definition, problems that could be raised as objections to it, and some first consequences of it. One consequence is the scale of value, which determines the action a man takes at any one time. Since action is purposeful behavior to remove unease, and since man always has at least one source of unease which he is capable of attempting to mediate or eliminate, and since he can only perform one action at a time, a scale of values arises whereby men act on the dissatisfaction that is most urgent to them at the time. (This also assumes scarcity, which ought to be a self-evident fact of the universe, and at any rate is assumed by other schools of economics; Mises addresses the performance of one action at a time.) Another result that closely follows, well known in other schools of economics, is the law of diminishing returns, which Mises just calls the “Law of Returns.”
Here we have (moreso in Human Action than in this blog post) a firm, rigorous, deductive derivation of commonly known economic laws, whose proofs are usually given with graphs of smooth curves and calculus. Mises terms the study of human action “praxeology,” and says that economics is only the most well-developed area of this science. I suppose this is because production and trade are obviously important as subjects of study, and more easily parsed because of pricing elements, goods produced, and such.
The amazing thing about the action axiom, similar to the axiom of choice, is the recognition of a fundamental element of not only all economic activity, but of all conscious endeavors undertaken by men. It is so self-obvious that it was overlooked for thousands of years of inquiry by men, and so its terrible implications were also not understood. Unfortunately, today, the action axiom is really only widely known on one side of the campus of Auburn University today, as well as at the Manhattan barbecue restaurant Hill Country once a month and a few other pockets around the world, but at colleges it has been shunted aside and forgotten. This is how economics was studied, in a logical and careful manner, in the School of Salamanca, Spain, long before Adam Smith, and certainly Carl Menger and Ludwig von Mises ever wrote. If any of its conclusions are to be proved wrong, the error in the reasoning must be pointed out. Later chains of reasoning notwithstanding — I’m not so fresh on them right now — the action axiom seems to be solid.
(Sadly, I cannot find the simple statement of the axiom in Human Action right now, but all the other citations are from page 11 of the Scholar’s Edition.)

The Existence Axiom — I am nearing the end of Atlas Shrugged, but I just reached the chapter called “This is John Galt Speaking,” which is probably the roughest rough patch of all in the book. In truth, this 60-page unbroken monologue (!) is less a piece of dialog in a book than a full exposition of Ayn Rand’s personal philosophy, just stuck right in there in the middle of a novel. I got 8 pages in last night; I fully expect reading the whole thing to take several days, whereas I’ve had other days where I got through 60 full pages of normal parts of the book.
In the dialog, John Galt takes over the airwaves of the whole country to explain the philosophy and moral system of the producers who have been victimized by society. He begins at the start of the start, positing the mind as man’s one tool of survival, as an animal has strength and speed and plants have, I dunno, the sun. Man must use his mind to attain the things he values for his life. Actions he takes toward self-preservation are natural and moral; thought therefore is the basic moral action, while having the things he values brings him happiness. However, unlike plants and animals for which attaining valued things is an automatic instinct, for man pursuing his goal is choice; he must decide to think, and in this way, morality is also therefore a choice.
Proceeding from here, Galt gives the kernel of his system of reason as the “Existence Axiom:” “existence exists.” That’s it. From this follow two immediate corollaries: the existence of something, and that consciousness exists. It seems so bare a statement, but it is understood and indeed necessary for all else we know and do. Why should it even need to be stated that existence exists?
In the world of Atlas Shrugged, most of society has unknowingly arrived at agreement on what John Galt calls the “Morality of Death,” where the mind of man is turned against himself, or rather disabled so that he cannot fend for himself and ultimately not survive. To preach this ideology, the academics and public leaders partially rely on demonstrating a number of inherent supposed contradictions of existence and of morality, from which it is concluded that morality is non-real, truth is unknowable or impossible, and the mind is useless at best and man’s greatest weakness at worst. Galt unmasks the fallacy of this ideology by reducing it to a contradiction with the existence axiom.
In a universe of absolutes where the existence axiom rules, contradiction is impossible, and of the many consequences of this recognition is the idea that man must use his mind to improve his life, attain the things he values while adhering to the moral code, and ultimately find happiness. All this from the simple sentence “existence exists.”

What is it that makes these axioms, with all of their vital ramifications, so hard to identify? Partly, it is that they are so deeply and universally embedded in our experience that we do not notice them until we reach much deeper problems which seem baffle all the prior assumptions we had held. It seems that their discovery must follow concrete experience lacking understanding. Without having observed a multitude of economic transactions, Austrian economists could not have discovered the action axiom operating behind them all. Not until contemplating and parsing many more derivative mathematical questions for thousands of years could mathematicians notice the function of the axiom of choice in all of them. Yet these truths are the most basic and fundamental to all of our systems of thought.

I feel some trepidation in asserting that an axiom is true; I rather prefer “seems to be true.” I do not know whether an axiom can be positively asserted by anyone to be true, for axioms are defined to be self-evidential and requiring no proof. However, if no proof can be given for the truth of an axiom, does that mean it is incontrovertible? How could an axiom be debated, if it is ultimately simply supposed to be accepted as a given fact of the universe? It seems that an argument could turn on whether someone simply refused to accept some axiom, or some specific part of one, because it was not self-evidential to them. This is important, because while the axiom of choice is only important/understandable to those with some mathematical training and I can’t imagine anyone attempting to deny the existence axiom, the action axiom on the other would probably be extremely controversial to discuss. Perhaps the difficulty is that the definition of axiom is a little subjective. Something may be self-evident to one, but not obvious to another. Again, it’s hard to imagine someone denying that existence exists, but the axiom of choice in mathematics was not accepted for quite a while after it was first proposed. (Not to say that its widespread acceptance makes it true, either.)

One can see, each of these three axioms are basic in concept yet primitive in importance. The question comes up, at least to me, is there an infinite number of such axioms? I can see no reason for there to be a limit on the number of axioms to be formulated by humans, and it seems silly to attempt to arrive at some final list of 10 axioms or whatever. However, it just doesn’t seem like there’s room for too many axioms as deep as this. Each one refines in a strong way our understanding of the world around us; how many new subterranean logical structures are there for us to discover?

May 5, 2010

The crisis in Greece, I would say, is the second broad event in the economic meltdown, crash, contraction, whatever it is, that began when the US housing bubble burst in 2007. The after-effects of that event (which still continue to unfold today — Mish and many others consistently point out that housing prices don’t seem to have finished dropping) were many large financial institutions essentially going bankrupt, and getting bought or bailed out. Credit contracted, unemployment shot up, tax revenues dropped and local governments everywhere had to cut back. The problems in Europe have the same essential causes as those here in America, and are perhaps even contiguous — i.e., the Greek crisis is in the same thread or chain of events as the American housing bubble. Of course the Greek government probably did not own tremendous amounts of Lehman stock, but rather, the false prosperity of all the more or less socialist Western economies has ended, and the real instability of the system has been unmasked.

The question everyone had been wondering about for the past couple of months with regards to Greece was whether the EU would allow the government to default on its debt payments or step in and “bail Greece out.” The default of a country like Greece would be very unpleasant, to watch as well as to experience, but the short term solution of bailing out a sovereign country raises many moral problems, not to mention sets a dangerous precedent.

The suspense was finally resolved in the past few days when the EU and the IMF announced they had arranged a bailout package for Greece, presumably accepted by all of the Euro countries, including Germany, the largest economy and most significant holdout against the plan. You can read all the gritty detail in plenty of other places.

This was very predictable; the belief today seems to be that those in trouble should be “helped,” no matter what other consequences there would be, no matter who is hurt in the process, and no matter how much they brought it on themselves. This goes as much for Greece as it does for unemployed citizens, banks, and car companies. Oh how much things do resemble the world in Ayn Rand’s Atlas Shrugged.

As I said before, a default by the Greek government would be bad. However, what the EU has signaled is that no country under its watch will be allowed to default on its debt. This will be tested when Portugal and Spain, which is much larger, face massive debt problems in the near future. Honestly, what do these politicians think will happen after this? The next country to go broke will accept it?

April 15, 2010

I am going to resume posting on here again. As a brief update on my life, I now live in Brooklyn, work as a math tutor, and had the great joy of paying $374 today in federal taxes. Specifically, since I am classified as an “independent contractor,” Social Security taxes are not withheld from my paychecks, so I pay it in a lump sum at the end of each year.

This is perhaps the most galling use of my tax dollars that there could be. True, Social Security is not used to regulate or restrict businesses or to shoot rockets into buses of civilians in Afghanistan, so I guess welfare programs as a class are better than warfare because at least the money is given to people to spend on food and the like. However, Social Security is nonetheless an extremely harmful program that, as I see it, only truly “benefits” you if you are already rich and will never be dependent on it in your life. I wrote about this several years ago in the Red & Black; perhaps I’ll give this a fuller examination on this blog one day.

However, as it pertains to me, this program is nothing but a fraud and a joke. I sent that check in the mail today knowing that I would never be getting any of it back. Even if the other many economic problems facing the country now stabilized, there would be no realistic way for Social Security to last until my retirement. I am sending my money off now to be given to some retiree somewhere. No actual investment or anything at work, no guarantee that someone will be there for me in 50 years to pay to me what I have already given to others.

One of the most illuminating statements I have heard about Social Security came from an economics professor I had at UGA back in the nascent days of my libertarianism. I asked him outside of class what he thought of Social Security, and he said, “My problem with it is that if someone tried to run an operation like that privately, they would be thrown in jail. It is only legal because the government is doing it.” Unlike a legitimate investment house, the Social Security system is funded by nothing the new payees. The money paid out to recipients is not coming from anything but someone else’s paycheck contribution. Unlike a legitimate investment house, the Social Security system operates like Bernie Madoff’s scheme. It cannot last.

But what is especially pernicious about it is that everybody seems to accept it as an unmitigatedly good program. I remember two particular responses to my Social Security column in the Red & Black. One came from a very liberal acquaintance of mine, Andy. He posited, I think in a comment on the column, that Social Security had “lifted millions of seniors out of the horrid poverty to which they were condemned” (paraphrasing from memory). Another was from a very conservative friend, who wrote a letter to the editor saying that Ron Paul’s advocacy of ending Social Security was “untenable” (I do remember that word for sure). Both of these people are up-and-ups within their respective party organizations.

It seems there is no willingness in the political class to even call into question the value of Social Security. This program, which (in my understanding, of course) only serves to hurt the poor of this country, endures in the public mind as a purely beneficial program. This misconception, this falsity about it, makes this use of tax dollars all the more pernicious.

Of course, there are much much greater financial problems facing our country now.

Finally, in what has been the main impetus for this post (that brief life update ended up being the main body of the post, I guess), I would like to register a prediction. It is pretty late now (as in, after 6 am) so I won’t get heavily into this now, but with regards to the “healthcare reform” measure that has recently passed into law, even though this law does not now contain any “public option” health insurance plan, I think it will in time lead directly to the creation of such a plan. As the stipulations of the bill come into effect (which will happen over the next few years), the market will get more and more distorted. Private insurance costs will only grow, as none of the roots of the problems (ridiculous rules barring such things as buying insurance across state lines) have been fixed, but new ones have been added (such as barring companies from refusing coverage or dropping customers and mandating coverage). Within a few years, the situation will appear so bad that the government will say (and I doubt conservatives will put up as much of a fight as they did this time around) that the market is completely out of control, and what needs to happen is a public option enters the market to “compete” with private companies and drive down costs. As soon as this happens, within a year, most people will have migrated to this plan for their health insurance. It’s possible, I suppose, that private insurance providers will be eliminated entirely by law at some point. I believe this is how some other western countries with national health insurance work, though not all (and I’m not about to start researching that right now). I think probably it will end up looking more like the educational system in this country. Even though public schools greatly dominate the primary education world, there are still private alternatives “in competition” with the government. However, since the public schools are basically “free,” they become the default for most people, while only people who can afford to send their kids to very expensive and supposedly better schools. The result is a tremendously unequal system that works less and less all the time for everyone, public and private. Furthermore, even within the public schools, there is tremendous inequality. Everyone knows which local high schools are the good ones and which are the bad ones. I imagine this is what healthcare is going to start to look like in the future, and it won’t take too long. I haven’t really given the full explanation here; I’ll discuss this analogy more later. For now, I just want to record these thoughts on the issue.

Finally, I started reading Atlas Shrugged this past week. I have never read anything else by Ayn Rand, however I have heard about this book all my life. 220 pages in, it makes for a pretty sad story so far — perhaps saddest because it looks so much like what is happening today.

January 12, 2009

After reading this story today, I think I’ve realized Obama’s flaw, the one thing he lacks that is keeping him from solving the economic crisis with the snap of a finger today while acting only as the president-elect: he is fatally prone to thinking too small.

President-elect Obama raised the jobs forecast for his stimulus plan from 3 million to as many as 4 million on Saturday, upping the ante of his economic blueprint for the second time in three weeks.

…

During the campaign, Obama had promised 1 million new jobs over an unspecified time. He bolstered that to saving or creating 2.5 million over two years in his radio address just before Thanksgiving. Then for Sunday papers the weekend before Christmas, aides said he had raised the target to 3 million, based on bleak new forecasts from economists.

Why wait until now to announce that your plan will create 3-4 million jobs? You’re holding us back Obama. Why didn’t you just say you’d create 3-4 million jobs at the start? Better yet, why stop there? If we can add that many jobs productively, why can’t we add double that amount? 10 times? I won’t be silent until Obama spends 40 million jobs into existence!

Newsweek carried a thought-provoking column this weekend on whether Bernard Madoff should go to jail immediately. I had read some incensed remarks wondering why he was allowed to spend his time before trial under “house arrest” in his apartment, and found myself in general agreement against this injustice. But this essay in Newsweek by Mark Gimein changed my mind. His main point, which the indignant wailers miss, is that Madoff hasn’t had his trial yet. It’s not like he’s gone and “made-off” with his money, either (forgive me the pun). Excerpts of the article:

The almost universal reaction to the conditions of Madoff’s release on blogs and newspaper comment boards was to ask why the hell a rich guy like Madoff should get special breaks and stay in his multimillion-dollar apartment instead of getting locked up with other defendants who can’t make bail in New York’s notoriously violent Riker’s Island jail.

A much better question, though, is why anybody is thrown in prison before trial when we have cheaper, better, and nonpunitive ways of making sure they don’t disappear. Yes, thanks to his money, Madoff has managed to stay out of jail while other federal defendants don’t. But for anybody who’s the least bit concerned about the rights of the accused, the way to make things fairer isn’t to jail Madoff before trial but to stop automatically jailing everyone else…

The presumption that defendants should remain free until they are convicted is centuries old in English common law. The writers of the Constitution saw it as significant enough that they made a point of keeping judges and prosecutors from short-circuiting the trial system by prohibiting “excessive” bail…

In the federal courts, the only purpose of bail was to prevent flight, until the passage of the Bail Reform Act of 1984. Part of a package of tough crime legislation, the 1984 law changed the calculus of the presumption of bail, weakening the presumption that people should not be jailed until conviction. (Capital cases have always been exempt from bail, creating an exception for the very worst crimes.) The bill added the amorphous standard of danger to the community as a determining factor in setting bail. On top of that, in the intervening years federal judges began confiscating bail bonds not only for actual flight but for all sorts of violations, making it harder for defendants to find bondsmen (who get paid 15 percent of the bail, which they keep whatever the outcome—a cruelty that’s hard to miss) to put up collateral.

Where once it was rare for defendants to be imprisoned because they could not make bail, it is now absolutely routine. In 2005, “the most recent year for which statistics are available from the Justice Department, only 34 percent of federal defendants were released before trial…

Those who imagine that revoking Madoff’s bail now will somehow strike a blow for equality later have it backward. Sure, it would hurt Madoff. But the high profile precedent and the howls of satisfaction at Madoff getting his comeuppance will yield to the reality that its most severe effect will not be on those who are well-lawyered and well-connected but on those who are not. To keep Madoff electronically monitored in his home opens the door for much less well-connected people to ask, with absolute justice, why they should not have the same right as well.

NEW YORK (CNN) — A giant lobster named George escaped a dinner-table fate and was released Saturday into the Atlantic Ocean after a New York seafood restaurant granted him his freedom, according to a statement from the People for the Ethical Treatment of Animals.

George the lobster was a “sort of mascot” for City Crab and Seafood in New York.

The lobster, which PETA said was 140 years old and weighed 20 pounds, had been confined to a tank at City Crab and Seafood restaurant in Manhattan when two customers alerted the animal group.

The PETA statement did not say how the extraordinary age estimate was determined, but restaurant manager Keith Valenti told CNN that lobsters can grow a pound every seven to 10 years, and he put George’s weight at 18 to 20 pounds.

“I’ve been here for 12 years, and that’s the biggest lobster I’ve ever seen,” Valenti said.

He said the lobster had been “sitting in the restaurant’s tank and acting as a sort of mascot,” but when PETA got involved and requested the release, it “seemed like the right thing to do.”

PETA President Ingrid Newkirk said in a statement, “We applaud the folks at City Crab and Seafood for their compassionate decision to allow this noble old-timer to live out his days in freedom and peace.

“We hope that their kind gesture serves as an example that these intriguing animals don’t deserve to be confined to tiny tanks or boiled alive.”

Shedding the tight confines of his old restaurant display tank, George was driven to Maine by PETA members and was returned to his natural habitat on the ocean floor Saturday, the organization said.

It is heartwarming, I suppose, that a possibly 140-year-old lobster finally is getting to experience the ocean, but I don’t know how CNN determined this to be today’s biggest, most important story. I also don’t know why I still get that e-mail.

During debate on the act, prescient critics worried that it might be construed to forbid giving prospective employees tests that might produce what was later called, in the 1971 case, a “disparate impact” on certain preferred minorities. To assuage these critics, the final act stipulated that employers could use “professionally developed ability tests” that were not “designed, intended or used to discriminate.”-
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Furthermore, two Senate sponsors of the act insisted that it did not require “that employers abandon bona fide qualification tests where, because of differences in background and educations, members of some groups are able to perform better on these tests than members of other groups.” What subsequently happened is recounted in “Griggs v. Duke Power: Implications for College Credentialing,” a paper written by Bryan O’Keefe, a law student, and Richard Vedder, a professor of economics at Ohio University.

In 1964, there were more than 2,000 personnel tests available to employers. But already an Illinois state official had ruled that a standard ability test, used by Motorola, was illegal because it was unfair to “disadvantaged groups.”

Before 1964, Duke Power had discriminated against blacks in hiring and promotion. After the 1964 act, the company changed its policies, establishing a high school equivalence requirement for all workers, and allowing them to meet that requirement by achieving minimum scores on two widely used aptitude tests, including one that is used today by almost every NFL team to measure players’ learning potentials.

Plaintiffs in the Griggs case argued that the high school and testing requirements discriminated against blacks. A unanimous Supreme Court, disregarding the relevant legislative history, held that Congress intended the 1964 act to proscribe not only overt discrimination but also “practices that are fair in form, but discriminatory in operation.” The court added:

“The touchstone is business necessity. If an employment practice which operates to exclude Negroes cannot be shown to be related to job performance, the practice is prohibited.”

Thus a heavy burden of proof was placed on employers, including that of proving that any test that produced a “disparate impact” detrimental to certain minorities was a “business necessity” for various particular jobs. In 1972, Congress codified the Griggs misinterpretation of what Congress had done in 1964. And after a 1989 Supreme Court ruling partially undid Griggs, Congress in 1991 repudiated that 1989 ruling and essentially reimposed the burden of proof on employers.

Small wonder, then, that many employers, fearing endless litigation about multiple uncertainties, threw up their hands and, to avoid legal liability, threw out intelligence and aptitude tests for potential employees. Instead, they began requiring college degrees as indices of applicants’ satisfactory intelligence and diligence.

This is, of course, just one reason why college attendance increased from 5.8 million in 1970 to 17.5 million in 2005. But it probably had a, well, disparate impact by making employment more difficult for minorities. O’Keefe and Vedder write:

“Qualified minorities who performed well on an intelligence or aptitude test and would have been offered a job directly 30 or 40 years ago are now compelled to attend a college or university for four years and incur significant costs. For some young people from poorer families, those costs are out of reach.”

Indeed, by turning college degrees into indispensable credentials for many of society’s better jobs, this series of events increased demand for degrees and, O’Keefe and Vedder say, contributed to “an environment of aggressive tuition increases.” Furthermore they reasonably wonder whether this supposed civil rights victory, which erected barriers between high school graduates and high-paying jobs, has exacerbated the widening income disparities between high school and college graduates.

Griggs and its consequences are timely reminders of the Law of Unintended Consequences, which is increasingly pertinent as America’s regulatory state becomes increasingly determined to fine-tune our complex society. That law holds that the consequences of government actions often are different than, and even contrary to, the intended consequences.

Soon the Obama administration will arrive, bristling like a very progressive porcupine with sharp plans — plans for restoring economic health by “demand management,” for altering the distribution of income by using tax changes and supporting more muscular labor unions, for cooling the planet by such measures as burning more food as fuel and for many additional improvements. At least, those will be the administration’s intended consequences.

I’ve come to see the university education system in America today as misguided and dysfunctional. As Will says, the hiring practices of big companies today (as well as governments at all levels) seem predicated on the idea that someone who went to college is automatically more valuable than someone who didn’t, and meets a certain standard of intelligence. I suspect that there are a lot of potential causes for this system–viewing education as a “right,” trying to use higher education to bring about “social change,” as two examples–and there are many negative effects of it.

Will points out what everyone already knows: that there is essentially a plateau of high-paying jobs which you cannot scale without a college degree. However, I had not fully considered the effect this actually has on poorer people. Under the current system, a person must take classes full-time for 3-4 years to have a shot at a higher-paying job. It is difficult, but not impossible, to support oneself by working full time while doing this. But the fact is that this time and money commitment is simply less and less of a workable option the farther down the economic ladder you go.

Of course, the government could attempt to make up for this by providing grants and loans to low-income students, as it does now. But with grants, the taxes required to raise the money would destroy jobs in the private sector, making the job competition even greater for these jobs. Loans don’t have this effect as much, but I still think that the private sector could and ought to be responsible for them as well.

Another problem that comes out of this college-for-all paradigm is an overall decline in the quality of education. Universities of all kinds, but especially big state schools, try to teach much more than they did a century ago. For example, the University of Georgia, where I go, offers the whole spectrum of liberal arts, business, journalism, agriculture, pharmacy, social work, forestry, and “family and consumer sciences.” This non-exhaustive list doesn’t even count their professional programs like law, vet, and soon-to-be-added medicine.

I see no reason it should be this way, with one institution trying to teach so many disparate disciplines and trades at the same time. Colleges began by teaching merely the liberal arts, as well as professions like law, medicine, and theology. Since all these other colleges were introduced, the focus on liberal arts has diminished, and I think they probably are not as effective. In UGA’s case, when you have a whole bunch of people there who don’t care about literature, science, and art having to take introductory courses in those subjects, it creates a lot of waste all around. It wastes departments’ resources by having to provide the courses. It wastes the students’ time and money by forcing them to take classes they’ll largely forget about after they are done. Who benefits from that? And students who major in liberal arts have to spend time as well taking courses in disciplines unrelated to their concentration, while working in a less effective department in their own area of study. Liberal arts majors are the students ultimately going into academia in these subjects, so we are potentially hurting the next generation of professors and researchers through this paradigm.

Alongside all this, I think there now exists a profusion of master’s degrees and programs. Since bachelor’s degrees are now so common, job seekers often find it necessary to earn advanced degrees to increase their competitiveness and earn higher pay. Thus, many schools now offer master’s programs in areas like “public policy,” for example. Such programs last for perhaps three semesters, putting students through classes that seem to add little benefit to their working skills. (I make these claims based on the experience of several friends enrolled in such programs.) This is all to edge out those students who have merely bachelor’s degrees looking for the same jobs, but what will we do when the master’s degree becomes the new standard of hiring for this tier of jobs? A master’s degree used to be a very rigorous certification to achieve, requiring one to defend a thesis or produce original research. Who’s being served now that it is slowly replacing the bachelor’s degree as the standard of hiring, and being greatly diluted in the process?

The New York Times had an op-ed last week dealing with this same issue. The author, a scholar at the American Enterprise Institute, concludes:

Discrediting the bachelor’s degree is within reach because so many employers already sense that it has become education’s Wizard of Oz. All we need is someone willing to yank the curtain aside. Barack Obama is ideally positioned to do it. He just needs to say it over and over: “It’s what you can do that should count when you apply for a job, not where you learned to do it.”